COVER
FG to Fund Infrastructure Delivery from External Borrowings – Minister
By Tony Obiechina, Abuja
The federal government says it will continue with external borrowings and draw downs from Sovereign Wealth Fund and the Pension Fund to support infrastructure delivery.
The Minister of State, Budget and National Planning Prince Clem Agba who disclosed this, explained that the reason for funding infrastructure provision from these sources is because the yearly budgetary allocation available to fix and upgrade the nation’s infrastructure is too insignificant.
Agba was speaking at the formal launch and presentation of the reviewed National Integrated Infrastructure Master Plan (NIIMP) in Abuja on Thursday.
According to him, “to address the nation’s infrastructure deficit the federal government has launched a National Integrated Infrastructure Master Plan (NIIMP).
“Presently, Nigeria needs US$150 billion yearly to implement the National Integrated Infrastructure Master Plan (NIIMP) between 2020 and 2030.
“This will amount to US$2.3 trillion required for the implementation National Integrated Infrastructure Master Plan implementation which the federal government says “is enormous and tasking”.
Prince Agba said the Federal Government alone cannot provide all the needed resources, therefore, a well-coordinated and strategic approach will be required to harness sufficient resources to increase the stock of Nigeria’s infrastructure to the desired level by 2043.
Besides investments by sub-national governments, Prince Agba noted that “the private sector is expected to play an increasing role either directly or in collaboration with the government through the Public Private Partnership (PPP)”.
Governments at both the national and sub-national levels he said will be “providing a supportive environment with stable and transparent policies, rules and regulations required for a robust PPP investment”.
He then stated that the Federal Government will “continue to explore external borrowing as well as opportunities created by other government controlled sources such as the Sovereign Wealth Fund and the Pension Fund to support infrastructure delivery.
The Federal Ministry of Finance, Budget and National Planning he disclosed “has established an Infrastructure Delivery Coordinating Unit (IDCU) within the Ministry to effectively coordinate the implementation of the NIIMP with other stakeholders including MDAs, sub national governments, the Private sector, international donor partners etc”.
“In this regards, the MDAs would be required to set up Infrastructure Delivery Units to ensure effective coordination with IDCU on infrastructure development.
“Likewise, the sub-national governments will be required to develop States Integrated Infrastructure Master Plan in tandem with the aspirations and objectives of the NIIMP” he said.
In his goodwill message, President of Manufacturers Association of Nigeria(MAN), Mansur Ahmed, underscored the need for faithful implementation of the NIIMP by the government and other critical stakeholders.
Ahmed observed that enabling environment and legal framework had not been provided for its implementation since it was first initiated in 2014.
He pointed out that infrastructure is the backbone of economic development.
He however, commended the Federal Government for the review of the NIIMP especially at the time when the African Continental Free Trade Agreement is being implemented.
By Tony Obiechina, Abuja
Governor of the Central Bank of Nigeria (CBN) Olayemi Cardoso has said that conflicts and natural disasters have put countries’ financial stability at risk.Cardoso stated this in Abuja at the Joint World Bank/IMF/WAIFEM Regional Training on Medium Term Debt Management Strategy in Abuja yesterday.
The CBN Governor who was represented by the Director of the Monetary Policy Department, Dr. Mohammed Tumala said, “Following the COVID-19 pandemic, along with other developments such as geopolitical conflicts and natural disasters, the financial strain on our sub-region has escalated, posing a threat to their macroeconomic and financial stability and prospects for faster recovery. ”He argued that the way countries manage debt owed to the Paris Club may not be as effective for this new set of lenders.Cardoso expressed concern that this new debt landscape could pose a threat to financial stability and economic recovery for many countries.The CBN governor said, “Public debt dynamics are increasingly influenced by significant debt servicing obligations to non-Paris Club members and private lenders, including commercial banks and bond investors.“This shift in the debt structure represents a critical evolution in the global financial framework, with profound ramifications for public debt management in our countries.”Similarly, the West African Institute for Financial and Economic Management (WAIFEM) warned that Nigeria is at a high risk of falling into debt distress and urged the federal government to look for ways of improving revenue generation.Speaking with journalists, the Director-General of WAIFEM, Dr. Baba Musa said, “When you compare Nigeria with the rest of the world or peer countries, you realize that with the 37 percent debt to GDP ratio, we still have room to borrow but the issue with the Nigerian debt is you don’t use GDP to pay debts rather you use the revenue to pay for any debt.“If you look at it from the revenue side Nigeria is at a high risk of debt distress in terms of our borrowing so what we need to do now is to step up our capacity to generate revenue, the more revenue we have, the less ratio of debt to revenue we have.”Musa said WAIFEM “is very much in support of what the federal government is doing because there is a window for the government to raise more revenue, all that the people need to do is to support the federal government diversify the sources of revenue and of course generate more sources of revenue. Once we have this, we don’t have debt problem but rather revenue problem.”According to him, “What the Medium Term Debt Strategy does is that it smoothens the debt service so that going forward when borrowing, you take into consideration the redemption profile that you have and the type of loans that you have in your existing portfolio and then it will enable you also to minimise the cost and risk the future loans will add to the debt portfolio.”In May 2023, the International Monetary Fund said that Sub-Saharan Africa could stand to lose the most if the world were split into two isolated trading blocs centred around China or the United States and the European Union.In this severe scenario, sub-Saharan African economies could experience a permanent decline of up to four percent of real gross domestic product after 10 years according to estimates—losses larger than what many countries experienced during the Global Financial Crisis.
From Anthony Nwachukwu, Lagos
In a significant step in its net zero vision, APM Terminals’ West Africa Container Terminal (WACT) has signed a 15-year Power Purchase Agreement (PPA) with pan-African clean energy company, Starsight Energy for a 1.2 Gigawatt hour (GWh) solar power for its facility in Onne Port, Rivers State.
The project, will cover approximately 30 per cent of the total terminal consumption and reduce its carbon footprint/CO2 emissions by circa 15 million Kg, shows WACT’s commitment to lead Eastern ports energy transition journey in alignment with the APM Terminals’ overall strategy of decarbonising its operations across the globe. “The topic of decarbonisation and green energy is something I am passionate about. A year or two back, when we brought this topic up, I wasn’t 100 per cent sure we would reach here,” WACT Managing Director, Jeethu Jose, said during the signing of the PPA.” According to him, Nigeria plays a key role in the overall group’s strategy to decarbonise the entire industry in the world, and “for me and all of us in the room, this is the first big step towards that journey. Today is a moment we record in WACT’s history as something that we would all be proud of.”For the Managing Director of Starsight Energy, Ladi Sanni, the partnership supports the company’s mission of building a long-term relationship and assisting global brands like APM Terminals’ WACT transit diversified energy supply by harnessing the power of clean, renewable energy sources, such as solar.Describing the PPA as proof of WACT’s forward-thinking energy management and environmental stewardship approach, Sanni said the deal “involves installing a 1092kWp solar-only system, which will be executed via a PPA.“The project impact will substantially reduce WACT’s carbon footprint/CO2 emissions by circa 15 million Kg over the contract tenor. This project also aligns with the broader objectives of moving away from carbon-intensive fossil fuels toward cleaner energy, which positively impacts the wider Nigerian energy sector.“Starsight Energy will leverage its expertise in power generation, using solar renewable energy sources and cutting-edge, data-driven technology to provide value to WACT.”WACT, owned by APM Terminals terminal and located in the Oil and Gas Free Zone in Onne Port, is the first greenfield container terminal in Nigeria to be built under a Public-Private Partnership (PPP) model.Over the years, it has grown to become the most efficient gateway to markets outside West Nigeria and remains a major gateway to Eastern Nigeria.
By David Torough, Abuja
Following criticisms by Nigerians, the Nigeria Electricity Regulations Commission (NERC) yesterday approved reduction of electricity traffic for customers under Band A from N225/kWh to N206.80/kWh.On April 3, customers were startled when NERC announced an upward review of electricity tariff for Band A customers from N68 per kilowatt-hour to N255/KWh.
The 8. 1 percent downward review is effective May 6 with guaranteed availability of 20-24hrs supply daily. In compliance with this directive, the Ikeja Electricity Distribution Company (IKEDC) has slashed the tariff payable by its Band A customers to N206.80 per kilowatt-hour from the N225/kWh approved by NERC.The spokesperson for the IKEDC, Olufadeke Omo-Omorodion, disclosed this in a notice yesterday.IKEDC said, “Dear Esteemed Customers, please be informed of the downward tariff review of our Band A feeders from N225/kWh to N206.80/kWh effective 6th May 2024 with guaranteed availability of 20-24hrs supply daily.“The tariff for Bands B, C, D, and E remains unchanged,” the IKEDC stated.Since the release of the supplementary Multi-Year Tariff Order, consumers categorised as Band A lamented saying the hike in electricity tariff weighed heavily on their finances.They appealed to the Federal Government to reverse the policy.The Nigeria Labour Congress (NLC) told the Federal Government to prepare for the consequences of the tariff hike, which it described as wicked and unpopular, stressing that since the government preferred to listen to the World Bank and International Monetary Fund, it should be ready to face the consequences.The Head of Information, NLC, Benson Upah said, “We did say earlier that this tariff hike is insensitive and unpopular.“So if the government elects to continue with the hike or persists in something that is evil, I’m sure it is equally prepared for the consequences of that evil.”On Sunday, the spokesperson for the Ministry of Power, Florence Eke faulted the organised labour’s opposition to the electricity tariff hike.According to her, the Minister of Power, Adebayo Adelabu’s justification of the electricity tariff hike at the Senate public hearing last week was still valid as government would “not toe the path of trade unions” on the matter.The spokeswoman maintained that the burden of the electricity subsidy was too much for government to bear.Appearing before the Senate Committee on Power at an investigative hearing over the tariff hike last week, Adelabu warned that there would be total blackout in the country in the next three months if the Federal Government failed to implement the proposed electricity tariff hike.“The entire sector will be grounded if we don’t increase the tariff. With what we have now in the next three months, the entire country will be in darkness if we don’t increase tariffs.“The increment will catapult us to the next level. We are also Nigerians, we are also feeling the impact.“This is because of the infrastructure requirement for the stability of the sector. But the government cannot afford that. And so we must make this sector attractive to investors and to lenders.“So, for us to attract investors and investment, we must make the sector attractive, and the only way it can be made attractive is that there must be commercial pricing.“If the value is still at N66 and the government is not paying subsidy, the investors will not come. But now that we have increased the tariff for A Band, there are interests being shown by investors,” he said.Customers await the downward review by other distribution companies across Nigeria.
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